From the Magazine: Investing in your shop

As shops require more sophisticated tools these days, it’s important to understand the cost of investing, the when, the what to invest in and how to generate income from equipment.

The average per-bay cost is approximately $30,000. For a start-up shop, the general setup of equipment will run you close to $100,000.

Some equipment is a must for all workshops, such as hoists and air compressors.

Let’s do the math for hoists. Key questions: How often are these used and also what type of vehicles you are going to be working on? If you’re working predominantly on trucks, you will need a larger hoist. Working on passenger cars and light trucks? Then you might not want to have the additional bulk that a heavier-duty hoist comes with.

Think about it this way: If that hoist slows down your mechanic by five minutes per job and they do about five repair orders a day and the door rate is $100, then that is a cost per bay inefficiency of $8,800 per year based on 220 working days.

Then there are diagnostic testers and more specific pieces of equipment. Your first question in each case should be how often it will be used.

For diag testers, you might argue that you need this for all vehicles that come in. And you’re probably right. That’s why you want to always go with quality. There are the obvious ones like Snap-on and Mac but there are also other ones such as Topdon, Launch and, one of my favourites, Autel.

When we think about the payback of these scanners, it’s pretty easy if we only look internally. Consider adding value to your customers in terms of easy-to-read printouts or reports of their cars.

Also, think about the diag tool as a system — can it do ADAS, oscilloscope, camera, TPMS, battery testing, etc.? This all leads to a better return on investment.

And don’t forget about perhaps the most underutilized piece of equipment in most shops: Wheel alignment equipment. These can cost you tens of thousands of dollars but be a good long-term investment from not only the number of alignments required to pay it back but also cutting space needed for a regular bay.

A key tip: Avoid buying tools you will use once. Tear yourself away from your internal need to be able to fix everything. You don’t need to be a “one-stop shop.” These tools aren’t an investment —they’re a ball and chain.

Remember, don’t go into investments in any way without a clear understanding of the potential revenue for your store, a plan of how you are going to advertise this as a service, the training of your staff for the equipment, sale of the job and the message to the customer.

Greg Aguilera is a director of IAC Canada, an organization dedicated to the management development of repair shops in Canada. He can be reached at greg@intautoconsulting.com.

This article originally appeared in the June issue of CARS..